The third quarter brought a “combination of challenges” to Sonoco, said CEO Howard Coker during Thursday’s earnings call, primarily in the form of cost inflation and volume difficulties.
“We have spent much of 2026 managing a dynamic business environment,” Coker said, citing input cost inflation for raw materials, freight and energy. “Freight costs alone increased $17 million year-over-year in the quarter, while diesel prices, which had stabilized in early July, accelerated to record levels.”
Plus, he said the cost of OCC is 90% higher than a year ago. In total, the cost for Sonoco to produce uncoated recycled paperboard has increased more than $60 per ton year over year, according to Coker.
Higher productivity partially offset that cost inflation and lower volumes. Sonoco also was able to offset some of the cost inflation with gains from the $60 per ton price increase for URB that Fastmarkets RISI recognized in September.
Industrial gains, consumer pulls back
Consumer packaging segment results were “below our expectations,” Coker said. Hot weather and drought both in Europe and the U.S. hit the agriculture sector and resulted in lower demand for food cans. However, the international paper can business delivered double-digit growth in volumes. Aerosol can demand in the United States was up 7%.
Sonoco’s industrial segment contributed $32 million of growth for the quarter, “driven by healthy trade and URB demand, along with pricing realization in North America,” said CFO Paul Joachimczyk. However, the declines in consumer generally offset the industrial segment’s gains.
Wire and cable reel sales experienced double-digit sales growth. Executives explained during their last earnings call that strength in the sector is driven by wire and cable customers due to the data center construction boom.
Footprint optimization and performance plan progress
Regarding the company’s three-year Profitability Performance Plan, the program is “gaining momentum and directly offsetting input costs,” Joachimczyk said.
The company charted $16 million in savings in Q3, up from $10 million in Q2 and $8 million in Q1. That’s tracking toward the low end of the three-year target of $150 million to $200 million. “We remain on track and continue to pursue opportunities to accelerate savings,” Joachimczyk said
Coker outlined actions already underway to improve performance. That includes another company restructuring to bring the entire global consumer packaging workforce into a single unit rather than geographically-oriented units. In August, the company named Ernest Haynes the president of global consumer packaging.
Sonoco is accelerating its footprint optimization and will close two sites in Europe, Joachimczyk said. This is expected to generate $15 million to $20 million of savings in 2027.
Outlook
Sonoco expects strong industrial demand and steady paper can volumes through year’s end.
“Hopefully you'll be consuming your Cheez-Its in the future out of a Sonoco paper can,” Coker said, referencing the September announcement that Mars Snacking will offer some types of crackers in Sonoco’s paper cans.
Consumer volumes are expected to be flat in Q4 and through 2027, while industrial is trending to be slightly higher in Q4. The company is “bullish on the aerosol side,” Coker said, although that segment is unlikely to maintain the 7% growth pace seen in Q3.
“Right now, we're assuming that things are fairly well leveled out” regarding cost inflation for the remainder of the year, Coker said.
